Mumbai: Market regulator SEBI on Thursday said it will probe alleged irregularities in subscription of shares of sponge iron producer Vaswani Industries and investigation will be completed within 30 days.
The company, its promoters, directors and intermediaries have been asked by the Securities and Exchange Board of India (SEBI) to cooperate in the investigations.
SEBI, on 13 May, had withheld the listing of the company’s IPO following complaints by about 100 investors alleging large scale withdrawal and rejections in the issue.
“A detailed investigations shall be initiated into the matter...The investigation shall be expeditiously completed within a period of 30 days, so that a decision on the listing application by the stock exchanges can be taken within the statuary time limit provided under the Companies Act,” SEBI said in an order.
The regulator also directed the merchant bankers concerned to deposit the amount collected from the issue in an interest generating account.
A sum of Rs 49 crore being the issue proceeds has been kept in public issue account opened for the purpose which is accessible by the issuer only after the listing permission is granted by the stock exchanges.
The initial public offer (IPO) of Vaswani Industries, which closed on 3 May was subscribed four times on the final day of the issue.
The company had offered one crore shares at a price band of Rs 45-49.
Ashika Capital was the sole Book Running Lead Manager of the issue.
The issue price was fixed at Rs 49 and the securities issued through the IPO were alloted to investors on 10 May.
However, following complaints the SEBI asked BSE and NSE to withhold the listing of securities until further instructions.
The complainants alleged certain applications were submitted to artificially inflate the subscription in Qualified Institutional Buyers and high networth individuals category to attract and mislead the investors.
The complaints said that post the closure of the issue, the same applications are being withdrawn by way of stop payment, stop allotment, cheque return and wrong cheque dates.
Vaswani Industries is engaged in the integrated business of manufacturing sponge iron, steel billets and ingots and power generation.